Buy-to-lets still the best choice for making money – ‘now is a very smart time to invest’
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For people looking to establish a second income, buy-to-lets are a potential option. Renting out a property has been a popular method in the past, but there has been some doubt in recent years as to the future outlook of the market.
Ross Counsell, chartered surveyor and director at GoodMove, explained what buy-to-lets are and the potential profits to be made from them.
“Buy-to-let simply refers to a property purchase with the intention of renting out, rather than living in it yourself.
“Renting out a second property has become an incredibly popular form of earning a second income for many, and considering the generation-rent phenomenon, it is also an incredibly wise one too.
“Over the pandemic period, there has been a wave of uncertainty in many areas, particularly in job security.
“Renting out property is a smart choice for acquiring a second income for homeowners.
“This seems to be the thought that has passed many people’s minds, with Google searches for ‘How does a buy-to-let mortgage work?’ increasing by a massive 1,500 percent in the past year.”
The buy-to-let market has been impacted by a variety of issues in recent years, causing some people to be put off.
“Undeniably, the buy-to-let market has taken an enormous hit over the past couple of years, with a 3 percent stamp duty surcharge hitting those that buy an investment property.
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He continued: “The rising house prices over the past couple of months have also been a large deterrent for many investors, as the 25 percent mortgage is a large wedge for anyone.
But Counsell says there is still plenty of scope to make money through buy-to lets.
“However, the tenants occupying the property will gradually pay the mortgage off for you with a buy-to-let mortgage.
“With Millennials now dubbed-generation rent, there is no question about demand in the rental market either,” Ross explained.
“This phenomenon sees young professionals renting out metropolitan properties such as flats and house-shares as an alternative to rising house prices
“Remember, average house prices now stand at a whopping £245,432 in the UK!” he said.
“Rent has also increased by around 7.1 percent on average, yet for first-time buyers, this is still cheaper than taking out a mortgage.
“So, for anyone able to afford a buy-to-let mortgage, now is a very smart time to invest in a second property.”
With the COVID-19 pandemic now less severe in the UK, Counsell says that buy-to-lets present a lucrative opportunity going forward.
“As we see the world returning to some semblance of normality, we predict a larger demand for renting property.
“Young people will want to move out of their family home into their own spaces, without the unattainable cost of a mortgage.”
Ross concluded: “Personally, I would recommend searching for buy-to-let properties with good locations close to amenities and transport links, with space that can hold multiple tenants.”
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